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Haier Rendanheyi Management Model in Stanford University

18-03-2017

American Pacific Time, on the morning of March 17 at 8:30 , Zhang Ruimin, Chairman and CEO of Haier Group, was invited to Stanford Graduate School of Business to teach MBA students how to create a subversive management mode in the Internet Age.

CEO Zhang Ruimin made a lecture in Stanford Graduate School of Business.

 

Mr. Zhang introduced Haier's Rendanheyi Model in detail about how to create a huge value for customers, employees and the enterprise, and how to make Haier maintain the vitality of venture enterprises in the Internet Age. He said, there has always been a paradox in entrepreneurial ecology of Silicon Valley. Firstly, Silicon Valley is like a tropical rainforest which is biologically diverse. But the problem is that after the start-up companies keep growing, they may inevitably become large traditional enterprises because they have to follow the traditional enterprise management mode of human resource and salary. During the start-up stage, enterprise is full of energy. But once developing, they will be caught in the rigescent bureaucratic management system, which is a paradox of Silicon Valley.

 

What Haier expects to do is to subvert itself, a large traditional enterprise, like tropical rainforest. The "Ren" in Rendanheyi Model refers to each employee; "Dan" refers to needs of each user; and "HeYi" refers to the connection between each employee and needs of each user. Through this model, each department of the enterprise will be transformed into micro-enterprises that are in the start-up stage forever. They can respond to users' needs quickly and flexibly. And once creating values for customers, they will get a good reward.

 

Therefore, Haier requires enterprises to be decentralized and disintermediated, in order to transform the original pyramid structure of enterprise organizations into a flat, parallel one. Each business unit has a direct relation with its own customers, and all business units gather together to create values for users. In this structure, business sectors transform into small and micro enterprises, and users become the only center of enterprise operation instead of higher-level leadership.

 

Haier has abolished its former bureaucracy system and transformed it into a platform which provides services for micro-enterprises in parallel with each other, and helps them raise funds and find various partners. For instance, the founders of Xshuai theater are three young men who read a lot of complains from pregnant women online that watching movies in the theater is very uncomfortable and they hope to enjoy themselves in the bed. So they raised funds through Haier platform, obtained technology from relevant companies in Silicon Valley, cooperated with Texas Instruments for spare parts support, and contacted with enterprises in Wuhan Optical Valley for production and processing all by themselves. The products has received a extraordinarily positive response after being launched on the market, from which the respective cooperation parties have also obtained  their own benefits, utterly achieving the goal of Salaries Paid by Customers. What' more, Haier, serving as a business ecosystem, will bring benefits for different parties on the platform by its various kinds of services to in turn create its own values.

 

Zhang Ruimin's presentation at the College of Business in Stanford University has produced a significant influence among the students. Some of the students indicated that the conceptions of "Uniting the values of employees and customers" as well as "Self-Independent Operation" are novel and originally created, which embody the spirit of innovation and revolutionary implications. The organization may be confronted with inevitable challenges and difficulties in practical aspect, which, however, will guide the company for achieving success in the future. And Haier is regarded as such a large enterprise that daring to actively challenge itself  to the edge of desperate crisis  before effective actions are taken, which demonstrates a typical example for large companies in the west.

CEO Zhang was interactively communicating with the students in Standford University.

 

It is understood that this is the third time that Mr. Zhang has been to American institution of higher education in business and management to introduce the innovation and change Haier's management. However, compared with facing the enterprise's middle-senior managers at Harvard Business School two years ago, the speech and communication activities in Stanford Graduate School of Business is more oriented towards students in business school who will be enterprise managers in the United States. Insiders indicate that  if the future stars in the western enterprises management circle accept the mode of Rendanheyi, it will lay a good foundation for the international layout of Haier ecology in the future.

 

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